Afternoon:
14°c
Taylor Wimpey sparks builder surge as it calls end of slump
19.06.09
Britain's housebuilders were surging on the stockmarket today after industry giant Taylor Wimpey called the end of the housing slump.
Taylor Wimpey — which many feared would not see out the depths of downturn during the dark days of winter — has, according to its chief executive Peter Redfern, seen “signs that the situation is beginning to improve”.
An extraordinary share price collapse and a £2 billion loss last year prompted fears for highly indebted Taylor Wimpey, which only abated after a £1.6 billion refinancing.
Redfern today told shareholders at the company's annual meeting: “The severe downside scenarios for which we have been planning now appear less likely to materialise.
“We have seen continued stability in the UK housing market. Whilst mortgage valuations and availability are still issues, there are signs that the situation is beginning to improve.”
Redfern conceded the upturn he is seeing comes just as the industry goes into its traditional summer lull but said he forecast a pick-up from September.
“We expect an increase in the average selling price of completions in the second half of this year.
“If the current market stability is sustained into the autumn selling season, we will look to increase the number of outlet openings during the second half of the year.”
Such bullish sentiments sent Tayor Wimpey shares racing up 8% or 2½p better at 33½p. Barratt Developments leapt 7% and other major rivals Redrow, Persimmon, Bellway, Bovis and Berkeley were up between 3% and 6%.
Tiddlers Telford Homes and Wren Homes posted gains of more than 10%.
But the analyst community remains sceptical. Robin Hardy at KBC Peel Hunt said: “Taylor Wimpey tries to accentuate the positive here [but it] cannot shake off the wider issues of unemployment and a poor lending environment. The pricing environment is not going to improve any time soon and this is the worst scenario for new build.”
Rachael Waring at Panmure Gordon said: “Although the market may take confidence from today's statement, we believe it is too early to predict a sustained recovery in market conditions. The statement contrasts with a more cautious outlook by Bellway a couple of weeks ago.”
Reader views (10)
You can get any analysts opinion you want if you pay them enough, "pump and dump" I believe it is referred to in certain circles
- Wallytrader, London
If there isn't an increase in the average selling price of completions in the second half of this year, can this chap be done for misleading the market ?
- Doug Watt, london e14
Why do so many equate rising house prices with good news? Perhaps it could be due to the fact that they are heavily in debt and need a boom based on inflated property values to keep their heads above water. We live in an economy which is based on a giant Ponzi scheme and irrationality. We need sustainabilty and planning not eternal boom and bust and increasing inequality.
- Corbo, Norwich England
Peter Redfern is 38, and would have been 22 at the end of the last housing slump in 1993. Would you trust the view of a man who has only been through a single housing boom and bust cycle.
- Dave Davies, Basingstoke, Hants
If they can't do business in May & June then they may as well call it quits. It's traditionally the busiest time of the year.
Let's see how they call the market in November.
As the saying goes' one swallow doesn't make a summer'
- Robert Fraser, Paddington, London
Great, start building 30 million new homes for all our "new guests"
- Grim Reaper, Hell
more spin is mandelson involved????
- Arthur Ruse, whitfield
Oh no,the signs are that the economy is recovering,what terrible news,please disregard this,and let us carry on talking down our country.
- Richard, Streatham
Where the devil is planet Taylor Wimpey? Ah yes, got it; it's that exotic place with the famous holiday resort: Fantasy Island.
- Ted, London
Thank you Taylow Wimpey for saving my shares portfolio!
- Jim, london
